What Is The Difference Between Universal And Term Life Insurance?
Life insurance policies are designed to provide financial protection to beneficiaries when the policyholder dies. Two popular types of policies are term life insurance and universal life insurance. Here’s a breakdown of the differences between these two policies:
|Term Life Insurance||Universal Life Insurance|
|Provides coverage for a specific period of time||Provides coverage for the life of the policyholder|
|Generally more affordable than permanent policies||More expensive than term policies|
|May include coverage for dismemberment and accidental death||Has a savings component that builds up over time on a tax-deferred basis|
|Expires after a specified number of years||Designed to last until the policyholder’s death|
|Can be renewed or converted to a permanent policy||Subject to penalties if terminated early|
|Typically cheaper for younger policyholders||Premiums remain the same throughout the policyholder’s life|
Term life insurance is appropriate for those looking for basic coverage for a specific period of time, such as young families on a budget. Universal life insurance is suitable for those who want coverage for their entire life and benefit from the cash value savings component.
It’s important to consider the pros and cons of each policy type before making a decision. For personalized guidance, consult a professional financial advisor who can help you determine which policy best fits your needs.